“Corporate Free Speech”

[Citizens United v. Federal Election Comm’n , 558 U.S. ___ (Jan. 21, 2010)
http://www.supremecourt.gov/opinions/09pdf/08-205.pdf ]

Ethical Perspectives on the News
Taped April 6, 2010; Broadcast April 25, 2010, 10:30-11:00 a.m.

Moderator: Scott Samuelson, Professor of Philosophy, Kirkwood Community College

Panelists: David Halfpap, Senior Vice President, Aegon USA
Nicholas Johnson, University of Iowa College of Law
Representative Nathan Willems, Iowa House of Representatives

Producer Cedric Lofdahl; Associate Producer Terry Boyden

Comments of Nicholas Johnson

Note: This is a transcript of the comments of Nicholas Johnson during the program. Out of respect for the literary and privacy rights of the moderator and other panelists, whose permission has not been obtained, their remarks are not included (although partial paraphrases of remarks by the moderator immediately preceding Johnson’s remarks are included for purposes of identifying the subject of his response).

[Moderator Scott Samuelson (SS): What does this decision change about the way things work in electoral politics in America?]

Nicholas Johnson (NJ): Well, actually, very little.  The significance of the decision, as a decision, is the Court’s overreaching, splitting five to four, in what is clearly a political decision like Bush v. Gore [531 U.S. 98 (2000)].  I think, as a former Supreme Court law clerk  and someone who likes to maintain the reputation of the Court, it’s done the Court a lot of harm.  And that was the position of Justice [John Paul] Stevens in his 90-page [dissenting] opinion as well.

I think it was really too bad that they did what they did in terms of this reaching way beyond which was necessary to decide the case, which is contrary to a basic principle of the court that you limit the decision as much as you can.  They could have decided that the law wasn’t designed to cover 90-minute documentaries. They could have said it wasn’t designed to cover a small non-profit like Citizens United.  They could have said it’s not designed to cover things that are distributed over video-on-demand, as distinguished from basic cable or over the air programming.  Instead, they reached out and made this broad decision about corporations’ First Amendment rights.

In point of fact, this battle was long since lost. Corporations could do under McCain-Feingold -- which is the way most people referred to this Bipartisan Campaign Reform Act of 2002 -- corporate executives can make personal contributions; hard money limited by amount, soft money totally unlimited. They can have PACs; so an automobile company can suggest that their suppliers and their dealers make contributions to the manufacturer’s PAC. They can give all the executives pay raises and then go around and collect $5000 from each of them and put them in a stack of checks that’s called “bundling” and hand that to the candidate. Plus they spend tens and hundreds of millions of dollars on the lobbyists that swarm over Congress and outnumber it by orders of magnitude, entertaining the candidates and politicians and so forth.

So all that went on under McCain-Feingold and still goes on. They could produce audiovisual material. The only limitation was they couldn’t distribute it 60 days before an election or 30 days before a primary.  The Court addressed that issue and said, “Oh yes, they can distribute it 30 days before or 60 days before.” So that puts in perspective what we are talking about and what we are not talking about.

[SS: You’re saying this is part of a much bigger picture and it’s a problem.]

NJ: It’s an enormous problem.  I talked to a friend in Washington a couple weeks ago who was a great activist at one point, a public interest oriented guy. He is now a senior partner making probably well over a million dollars a year.  He said, “Nick, I’ve got everything. I’ve got a wonderful wife. I’ve got a condo that’s a three block walk from the law firm. I’m making more money that I’ve ever made before. All my kids are doing great. And I’m miserable.”  I said, “Well, what’s that about?” He said, “Washington is just awash in money.  That’s all it’s about. It’s money, money, money. And it’s just very discouraging and depressing.”

And so we see that we are the only industrialized nation in the world that does not have universal single-payer health care. And now we see we are going to try and improve broadband in America. But we are not going to do the thing that every other country in the world has done [require open access and net neutrality] in order to have much lower prices than we do, much faster service than we do, many more homes wired up than we have. So the same thing happens here.

# # #

[SS: Could this decision possibly provide some sunlight on what’s already a “Washington awash in money?]

NJ: Well, let me lay out a fundamental here first as to what this is really about in terms of its impact.  I did a study some years ago, one version of it I wrote up as an op ed column in the Des Moines Register, and then I put it up on my website, Nicholas Johnson dot org with all the footnotes documenting it.

What do corporations get for their contributions?  It turns out that when you give money in the $100,000 to $1,000,000 dollar level – and when I say “corporations give money” it means a corporate executive is giving money, the lobbyist is giving money, the bundled checks, the PACs, whatever – if you want to fund a party’s national convention, you can give them a million bucks to do that.  But what do you get back?

It turns out there is a formula. You get back $1,000 for every dollar you give. You give a million, you get a billion.  Now it takes a variety of forms. It may be a tax break. It may be a price support program. It may be a subsidy, it may be a bailout  of your bank. It may be a tariff that hikes the price you can charge for your product. It may be a defense contract. There are all kinds of ways that money flows from the middle-class and poor to the wealthy and to the corporations.

It is not all in terms of cash. It may be in terms of not having to pay taxes. Many corporations get to the point where they have so written the tax law that the taxpayers actually have to pay them at the end of the year. They don’t pay any taxes at all.

As I’ve often said, “The problem is not that the corporations violate the law. The problem is that they write the law.” And that’s what they get in return for these contributions.

As [Justice] Stevens pointed out in his dissent, from the standpoint of the public official running for office, there’s absolutely no difference between a video that you produce and put on the air that excoriates your opponent, as Citizens United did with their 90-minute video documentary about Hillary Clinton. It said she was unfit for the office; she was dangerous for the country; nobody should vote for her.  That is fully as valuable as giving the candidate the cash that the candidate transfers to the media advisor and to the producer who makes the commercials that go out on the air.  So it’s still a contribution to the candidate and recognized as such by the candidate.

[SS: Isn’t a corporation just an association of people? Why shouldn’t they be able to have a message?]

NJ: That’s another thing that’s wrong with it [the Citizens United decision]. This applies to unions as well as corporations.

Why were unions forbidden to use union dues for campaign contributions?  They can collect money from their members for political purposes. It is voluntarily given.  Because, the argument was, there are some union members who don’t necessarily want to support the candidate that the union president wants to support.

[SS: That relates to Nate’s comment that the same point can be made about the shareholders of a corporation.]

NJ: You are absolutely right.  [Iowa Representative] Nate [Willems] is one of our Iowa graduates whom we are very proud of. He’s doing a great job in the [Iowa] Legislature and we are very lucky to have him.

But, yeah, that’s the problem.

# # #

NJ: Since this is a show about ethics, some people have more ethics than others and so on.  But a corporation, by definition, is legally forbidden to have ethics.  The corporation has the mission of maximizing profits. That’s the least you can say.  The best that you can say is if they say “our mission is to maximize profits within the limits of the law.”

I remember a conversation I had with Milton Friedman once about water pollution.  He said, “Forget about trying to preach ethics to these guys who’ve got a bunch of competitors up and down the river. Get the legislature to pass a law.  And then most of them will want to follow the law. But don’t try to get them to be ‘ethical.’”

So I think with free speech for individuals, at least you have some possibility of ethics. There may be some motive behind their speech besides simply trying to increase their annual income. But for a corporation there is no question, that is the only thing they are about legally.

[SS: There is some criticism that this decision will give foreign corporations influence in American politics.]

I think that is a complex issue.  Someone who is only a foreign citizen, a corporation that is only based in a foreign country, is forbidden to participate in our politics. But anymore there are no nations.  There are just tribes and global agreements and global corporations.  When you want to buy an American car it is going to be manufactured in Malaysia. And if you want to buy a Japanese car it is manufactured in Indiana.  And so I think there clearly is an opportunity, if you care about that, for a foreign influence to come into our system more than it would have in the past.

# # #

NJ: Speaking of corporate ethics, before we go off the air, I want to say a nice word as a former FCC commissioner, about KCRG-TV having this program. This is very unusual in American television. It almost makes it an ethical act on their part. [laughter from other panelists] No, but seriously, I think that is a very nice thing that they do. I’ve often watched this program and enjoyed it.

[SS: Could the Congress revisit campaign finance law after this decision? Would that take an amendment to the Constitution?]

NJ: Two quick solutions that it could do. One, the Court might very well support what you [Representative Nate Willems] and your colleagues in the Legislature have done: require the shareholders to show their approval. Two, there’s a proposal that corporations would be prohibited from participating if they were also federal contractors. The odds are that would be upheld.